Organization of Petroleum Exporting Countries

Organization of Petroleum Exporting Countries (OPEC) An international organization seeking to regulate the price of oil. The first moves to establish closer links between oil-producing countries were made by Venezuela, Iran, Iraq, Kuwait, and Saudi Arabia in 1949. In 1960, following a reduction in the oil price by the international oil companies, a conference was held in Baghdad of representatives from these countries, when it was decided to set up a permanent organization. This was formed in Caracas, Venezuela, the next year. Other countries later joined: Qatar (1961), Indonesia (1962), Libya (1962), United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973), and Gabon (1975). Ecuador left OPEC in 1992 and Gabon withdrew in 1995. OPEC's activities extend through all aspects of oil negotiations, including basic oil price, royalty rates, production quotas, and government profits.

The organization rose to prominence in the mid-1970s after it virtually quadrupled the price of oil over a three-month period at the end of 1973, and imposed an embargo on Western consumers who had supported Israel in the Arab-Israel (Yom Kippur) War. OPEC's successful use of the ‘oil weapon’ had important repercussions for NORTH-SOUTH RELATIONS, inspiring greater assertiveness among developing countries, and giving weight to their demands for a NEW INTERNATIONAL ECONOMIC ORDER. Some Arab states made large profits from the sale of oil during this period. During the 1980s, however, the influence of OPEC on world oil prices declined slightly as Western industrialized countries, such as Norway and the UK, began to exploit their own oil resources, found alternative forms of fuel, or initiated programmes to cut the use of energy. The Organization of Arab Petroleum Exporting Countries (OAPEC), based in Kuwait, was established in 1968, to coordinate the different aspects of the Arab petroleum industry, and safeguard its members' interests.